hello, everybody. a very warm welcome to talking business weekly with me, aaron hazelhurst. let's go and take a look at what's on the show. the big china challenge. it's a year since covid lockdowns were abandoned, but is the world's second biggest economy back to full health? the struggles of the property sector, soaring youth unemployment and ongoing trade tensions with the us are just some of the problems xi jinping's government is trying to tackle. this leading china economist will explain how the government needs to balance its ambitions with the changing demands of a radically different younger generation if it wants the country to thrive. plus, this former head of the international monetary fund's china division tells me how beijing struggles are affecting all of us

around the world and keeping the internet free and fair. the big boss of web browser, firefox, tells me how herfoundation is trying to compete with the deep pocketed rivals like google and apple and still have an influence. wherever you'rejoining me from around the world. once again, a big hello and a warm welcome to the show. china — it's the world's second biggest economy. it trails only the united states and is more than four times the size of the next on the list, japan. so what happens there certainly matters. but a year since the government abandoned coronavirus lockdowns, it's an economy that's still struggling. the challenges for president xi jinping's government include vast debts in the property market and local government, soaring youth unemployment, an ageing workforce and ongoing trade tensions with the united states. his government set a target of around 5% for economic growth this year. it was the lowest in decades, and some say that was deliberate, but it will be achieved, according to the imf, the international monetary fund, who finished their assessment visit in november whilst warning the big

challenges still lie ahead. we project china's gdp growth to reach 5.4% in 2023, reflecting a strong post reopening rebound in domestic demand, particularly consumption. we project growth to slow to 4.6% next year as we expect the weakness in the property sector to continue and external demand to remain subdued. the vast mismatch between supply and demand for new properties is certainly casting a big shadow over the entire chinese economy. as our china correspondent stephen mcdonell found out on a trip to queen dale. this woman bought a flat here a couple of years ago, but her estate remains largely empty

and its value has collapsed. pay me back. of course i'm worried. what can i do? everywhere there are shelves of tower blocks which appear abandoned. this problem with real estate supply and demand isn't limited to this area. it isn't even limited to this city. you can drive out of here for hours and you'll find clusters of towers with unoccupied or unfinished apartments, many where workers stopped altogether. and consider that the same thing is happening in province after province right across the country. one estimate says that amount to 26 million unsold newly built homes. that's enough to house the entire population of italy. and it's also draining confidence. there's also not enough jobs for young people. 21.3% of 16 to 2a—year—olds didn't have one injune, prompting the government to stop publishing those numbers altogether. part of the problem is less jobs are being created by foreign companies. in september, foreign investment was down by a third compared to the same time a year earlier, amid global economic challenges, including inflation and those us—china tensions in the chinese system.

ultimately, the buck stops with president xi's government, and he has some big challenges to tackle. translation: our our goal is not to have just a few wealthy - people, but to realise a common prosperity for all. employment, education, medical services, child care, elderly care, housing, the environment and the like. these are real issues important to people's daily lives and close to their heart. they are being steadily integrated into our top level plans for national development. so what does china's development look like in the years ahead, and how difficult will it be to solve the tensions between socialism and capitalism? well, i've been speaking to one leading china economist who's a professor at the london school of economics and has been addressing those very questions in her new book, the new china playbook.

a real pleasure having you on the show. and let me start with this, because the challenges for president xijinping when it comes to china's economy are a vast and varied. i'm just wondering why we've got you. why we've got you, what's the most pressing point, do you think, in your consideration? the chinese economy is undergoing a serious challenge. the lowest growth for the last a0 years, high youth unemployment, mountainous debt and the debt overhang and very little income growth so that people are saving 50%. household savings rate has really peaked. now, these are serious challenges, but i want to ask a question. you know, is this really cyclical or structural? is it a permanent decline like the west has already depicted demographics and ageing and more state control, meaning a doom loop? i don't think it's the latter. the very fact is that the chinese economy did not see this kind of huge stimulus package that europe and the us had during the pandemic. so there's a lack of confidence. post—pandemic recovery is slow. it's a painful, long adjustment.

added to that is the real estate. real estate is really dragging everything down. you're saying this is just cyclical at the moment? i think most of it is cyclical. i think we cannot underestimate china's long run potential, the ability to change policies very swiftly. you can't write off the second largest economy and say it's not going to overtake the us at some point. i think that's the wrong assumption. in your recent book, you argue that china's entering this this new era soon to be shaped by a radically different younger generation. how will that shift change the chinese economy? the new generation is very different from the older generations. they haven't gone through the huge vicissitudes the nation has gone through, no psychological and physical hardship, economic hardship. they had it easy. they have it much easier. they're going to want to spend more. they rather be more relaxed, work less. they spend so much more on things

like leisure, travel, apparel, entertainment much more than the previous generations, despite having lower income. so that's a totally new, kind of way of life for the new generation. earlier this year, we saw china's youth unemployment passed the 21% mark. but we've also seen over recent years beijing sort of cracking down on youth focused industries such as things like private tuition, technology, like gaming. i'm just wondering, all of that, has that helped or hindered the situation? the major problem is that there's a skill and education mismatch for the youth. so 100 million new college graduates in the last ten or 15 years, where do they go? i mean, they have a university diploma, but what's what's in the economy? what kind ofjobs are there? there's 25 million manufacturing jobs yet to be filled. but these young people whose families have paid an enormous sum for their education, hence the regulatory crackdown, the tutorial sector, you know, they don't want their kids to to be in some factories.

so that mismatch is really important. but the government is actually raising the status of vocational jobs, less discrimination. so that's actually happening really rapidly. it makes you wonder if the chinese government's policies are forward looking enough to embrace this this whole new generation. i think chinese government is one of the most forward looking and continuous with continuous policy governments in the whole world. and its ambition is to make china be a higher point in the value chain in the global supply chain, and to train its engineers and technical workers. and so that's the direction. but, you know, tutorial programmes, this has gotten really kind of out of hand because of the one child policy. all the parents want to make their kids dragons and phoenixes and they would empty their bank accounts to do that. and indeed, a lot of these companies exploited that demand.

the private sector is the major driving force of the economy. they provide the lion's share of the jobs, which means social stability and national output and innovation. the government knows that. so the government actually goes out and really actively tries to support the private sector. you might you might be sceptical but recently there's been a slew of policies that have come forth, at least changing the attitude towards the private sector. and as you very well know, one of the big problems for china at the moment is debt, in particular in the property market. you've got two very large property developers. you've got china evergrande, it has debts of around $300 billion. country garden has debts of around $190 billion. and there's something like 26 million unsold homes. does this suggest that china can no longer rely on the property market for economic growth? if you look at the data, the pre—pandemic trend, pretty much 80% of the sectors have recovered almost back to pre trend levels, except the real estate,

which is just the real estate, is really what's dragging china's growth down. you had this huge bubble. the government is not going back to that. the real estate because of the high housing prices, have made people not want to have children because they can't afford the living space. and that has caused a social concerns. and real estate developers have grown and really borrowed and bought soccer clubs and, you know, have behaved somewhat irresponsibly. and that's not going to return either. we have to still remember that there's still hundreds of millions of people that are going to move from rural to urban areas. but it's going to be a long, painful adjustment because these people don't yet have the income to be able to purchase these apartments. and by the way, a lot of these apartments, empty apartments, are going to be turned into affordable housing, which is consistent with china's common prosperity of supporting middle income group. and that could be a good thing too.

one of the problems linked to the whole property sector is the the selling of land that we used to see the local, local governments sell, the land that used to be a cash cow to them. now that's kind of dried up. is there a concern that these local governments simply won't have the funding to provide the services that they need to provide education and health? the local government debt is a major issue. and i think if there were anything i'd name, it's one of going to be one of the biggest challenges to the economy going forward because they have so much responsibilities for the local economy and 50% of their revenues came from land sales. now that's gone. so they have to find alternative sources of revenue. they're going to rely on the entrepreneurs and the companies to do well and so collect taxes. let me talk about manufacturing, of course, over the decades being a driving force for economic growth for china, i think it's still accounts for like 28% of the economy. i'm just wondering how you do. i'm just wondering, have we seen the end of china

being the world's factory floor and other industries coming into play? the leadership in china has this idea that manufacturing, making real stuff, technical stuff, is really important and china wants to be a bigger and i quote unquote, "smarter germany" in the sense using ai data communications to do high value added manufacturing. so that is very much still the goal, but is to climb up the value chain. a lot of the low end manufacturing has already moved to neighbouring countries, southeast asia and so forth. but that in the leadership mind is most important. hence the crackdowns on the real estate and even the financial system because it doesn't see it as as the real economy. let me end on this, because i'm just wondering, does beijing president xijinping, do they even care about the huge role that china plays on the global economy, especially if that conflicts with the domestic agenda? do they care about the role

that china plays? interestingly enough, the us is the world's largest economy, but at no point in time does the fed make its decisions, despite all the impact on the global economy based on external environment, but rather on solely on domestic economic conditions. now, let me just say that china's challenges today are overwhelmingly internal, and hence the focus is internal. but it does want to play a bigger role in the global economy. and there's absolutely no contradiction to saying that they want to be critically independent on certain technological goods and components at the same time embracing globalisation in terms of investment and trade. on that point, professor, pleasure having you on the show. thanks for your time. good luck with the book. thank you. so china has to forge a new economic path in the post—covid world,

but whatever choices it makes, there will be considerable consequences for the rest of the world. something i've been discussing with a cornell university professor of global trade who used to head up the international monetary fund's china division. eswar prasad, a real pleasure having you on the show. and let me start with this, because it does seem pretty clear that china's economy isn't exactly firing on all cylinders. so how big of a problem, ishwar is that for well, for the rest of the world? china is the second largest economy in the world. and in the period since the global financial crisis of 2008, china has been the main driver of global growth, adding even more to global gdp and global demand than even the united states. so when the second largest economy in the world slows down, it means that demand for commodities is relatively weak and chinese consumers are holding back on consuming. so this means that overall global demand is much weaker than it would otherwise be. the economic relationship between china and the world's biggest economy the united states has in recent years.

eswar, it's been defined right by these tariffs and other trade restrictions. they were started in 2018 by then—president trump and they continued, of course, with president biden. but how much of a hobbling china's growth or has china just now learned to live with them? so the reality that china faces is that the relationship between the chinese and the us are going to remain rocky for a while. but it is really china's attempt to move into what are seen as the industries of the future, such as clean energy, green technologies more broadly, which also happen to be the areas where the us is trying to establish its dominance that have become the central points of conflict. and certainly at a moment where business and private confidence more broadly in china is weak, the ongoing tensions between the us and china don't do anything to help either consumer or business confidence. i mean, china is clearly concerned about the slowdown in its exports.

i mean, that's it's a pretty important sector. it makes up roughly 28% of the chinese economy and the government. and the government, it's actively encouraging foreign companies to invest more in manufacturing. but i'm kind of wondering what happens if that doesn't work? what china has been trying to do is to promote innovation domestically. the difficulty, though, is that the private sector feels that it does not have the government support and it has been holding back on investment. so china still relies on foreign technology. so now that you have geopolitical tensions and the chinese economic slowdown that are deterring foreign investors from coming into china, they're also not bringing technological expertise with them. so this is going to make it very difficult for china to accomplish many of its economic objectives. just how important is the revival of china's private sector to help reboot china's economy? so i'm just back from some travels in china, and there seems to be a very significant disconnect

between what the government is saying, that it continues to support the private sector and what private entrepreneurs seem to feel. they feel that the government is much more hostile towards them and wants to make sure that no private enterprise grows too big for its britches. now, the reality that beijing faces, however, is that they need the private sector. small and medium enterprises in both the manufacturing and services sectors have been very important for generating employment growth. so unless the chinese government can fix this problem of declining private sector confidence, especially private business confidence, it's going to be a tough slog for the economy. xijinping's big economic vision for the world has been that that $1 trillion belt and road initiative, which actually has just marked its 10th anniversary. and to the uninitiated, that's china investing in building infrastructure all over the world in an attempt to fuel

economic growth and things ranging from what ports in greece to to railways in zambia. is that spending by china likely to slow now thatjust china is struggling so much economically at home? so for a while when china was doing well economically, it seemed to make sense for the government to use the belt and road initiative and other initiatives to try to use its financial clout to also increase its geopolitical power around the world. so at a time when china is receiving pushback from the countries that it gave money to and when it is not generating good returns of those investments, now that that is happening at the time when the chinese economy itself is weak, i think we're seeing a reconsideration from beijing about the wisdom of undertaking such investments at such scale around the world. now, for beijing, it has become very difficult to accept losses on its lending because on the one hand, there are significant economic

costs, of course, to writing all those loans. but there is also the symbolic element that beijing doesn't want to be seen as having made unwise investments. it does not look very good for the central government in beijing that it encouraged many of these investments and has to take losses at a time when chinese citizens are having to tighten their belts because the economy is not doing so well. do you think, given the ongoing cost of living crisis for many parts of the world and that many western consumers are more reluctant to put their hands in their pocket, i'm kind of wondering, do you think the era of global growth fuelled by buying cheap stuff from china? do you think that's now over? now that translates into a broader question about whether we've seen the end of globalisation. at one level certainly there are geopolitical and other reasons why many manufacturers are turning away from china as a key component of their supply chains. but the reality is that consumers around the world are still going

to try to find the cheapest products they can find, and manufacturers will try to find the cheapest ways of producing whatever it is that consumers want. but certainly at a time when wages are not rising very fast, prices are rising very fast, consumers around the world are certainly going to be a little more reluctant to dip in their pockets to spend. eswar prasad, a real pleasure having you on the show. thanks for your time and we'll talk to you soon. it's been my pleasure. thank you. 0k. you know, competing against the likes of tech giants such as google and apple, it's no easy feat. but how much harder is it when you're a not for profit foundation that wants to make sure that the internet plays a more positive role in the world? well, that's exactly the challenge that the chair of the mozilla foundation has to face every day. its main product, it's the firefox web browser that normally doesn't come pre—installed on our devices. mitchell baker, thanks for your time. really good to see you. and let's start with the question.

what we've been talking about on this week's show, china, and one of mozilla's biggest goals and founding principles is to try and make the internet a global resource open and accessible to all. so, mitchell, how can you do that for china when the internet is so heavily censored there? yes, it's a real challenge. there's actually many things about the internet that make it a global public resource, and some of those are censorship that we see at the human experience level and others of those are in the internet and technology and how things work. i'm actually going to the un next week to discuss these very topics and that the consumer experience side their vision of how online life works is very clear and it is in service of stability of the society and the state. as many economies, including china, look increasingly to service industries for economic growth.

mitchell how important is a free and fair internet to that, and what do you think that contributes to economic growth now? it is such an important question because the free and open internet is what allows competition and what allows new things to develop. and so you need a free and open internet to be able to reach consumers on a level playing field, to be able to offer the business you want and to be able to compete without having to start having products all up and down the stack the way the giants already do. let's talk about your competition and, of course, money. how do you mitchell, how do you take on the likes of apple, which is sitting on a cash pile of some $162 billion, google's parent alphabet, it's it's got about $118 billion in hand. i mean, that's a hard battle, isn't it? yes, it's a very hard battle. competing with the giants in any technology is tough as we live that difficulty every day. and so i think the idea of a head on challenge to one of the giants

and exactly the design space they working in, you know, is a long time coming. now, open source has done that on numerous occasions, but it does take time and it does take some changes in the environment. at mozilla, we've always believed that technology or the internet should not be immune from regulation because that is how citizens and societies exercise their vision of life into the business world. i think one reason why mozilla is nonprofit status and so important is because we make decisions that an investor might choose not to make. kind of to push the internet closer towards the balance that society wants. since you launched firefox back in 2004, mitchell, you've seen your share of the internet browser market plummet from a peak of around 30% to around now about 3%.

does there become a point at which it's just not worth the cost of trying to compete with the big guns? we compete in the browser for a few different reasons, though. it might seem like we love the browser because we've always built it. that's probably true, but underneath that the browser is an odd piece of software. the only protection you have is whatever protection the operating system gives you, which has a general level, can provide some security. and we view firefox as representing you and that's what we do with the browser. everything from protecting you to allowing you to change simple things like websites and fonts to much deeper things that consumers don't experience directly. so we compete because that question of who represents the individual in a highly centralised technological society is critical. your foundation's biggest source of cash is that half a billion dollars a year that google pays to be the default search engine on firefox. and at the moment, google's on trial in the us,

where the usjustice department accuses it of unfairly shutting out rivals from the position of being the highly profitable default search engine on web browsers. how concerned are you about the foundation's future, given that that trial could lead to the loss of that money from google? there are many reasons to work on revenue diversification, and we've been doing that for some time. there's the one you mentioned. like something catastrophic could happen. there's also long term change in consumer habits or market or customers or business relationships. and so if there is some catastrophic change, whether it's the one you raise or something else in the future, then we'll address it. but the long term piece of how is it that the internet�*s impact on society is a more positive benefit for society than it is today? we'll continue with that, even if the form of work changes. mitchell baker, the big boss of mozilla. thanks very much for coming on the show and we'll check in with you soon. it's my pleasure.

well, that's it for this week's show. i hope you enjoyed it. don't forget, you can keep up with the latest on the global economy on the bbc news website and the smartphone app. of course, you can also follow me on. also follow me on x. i'll x you back. you can get me a bbq. aaron, thanks for watching. i'll see you soon. bye bye. hello there. flooding still, of course, a concern for many, although the rain has now largely eased and the number of flood warnings is continuing to steadily drop. but there are still plenty of them in place. so do take a look at the details on those on the bbc weather website. of course, it's a lot drier now than it has been recently. we're set to keep that dry weather as we head through the next few days. it's certainly feeling colder. temperatures closer to the seasonal average, frost and fog forming through the overnight periods. also some icy stretches with the ground so damp, too, and the high pressure is set to stick around as we head into next week. it's just blocking all of these atlantic systems pushing in from the west.

so we should stay dry and settled with some showers perhaps towards the east. and we're starting off sunday morning with quite a widespread frost, although temperatures a little higher, just above freezing where we keep the layers of cloud, fog lingering on for much of the morning yet again. it's going to be very slow to lift and close some very dense patches out there. the sunshine very weak at this time of year, not doing too much to burn it back. but there will be a lot of sunshine around across scotland, northern england and northern ireland. sunny spells for england and wales, but always cloudier towards these north sea facing coasts with quite a noticeable northeasterly wind blowing a few showers onshore at times, but wintry over the north york moors and perhaps over the downs of kent. but these will be the days highs — two to six degrees celsius, although in the north easterly wind it's going to feel a good few degrees colder than that. and it's more of the same as we head into monday. perhaps the breeze picking up a little across east anglia and the south east of england as we head through the day. so feeling colder once again, but some sunny spells around again. any fog could linger

on for much of the morning, even into the afternoon, temperatures between three and five degrees celsius. but once again, i think some places could possibly feel subzero in exposure to that brisk northeasterly wind. it will be windier through the channel as well. and then into tuesday, we'll see more of a wind developing towards the south of england. and this will allow the cloud to break up a little more. so more in the way of sunshine probably. but again, highs of only three to 6 degrees celsius, some fog and some low cloud further north. and here's the outlook for our capital cities as we head through the rest of the week. temperatures will rise a little as we head into thursday and friday. it's still looking mostly dry. bye— bye.

live from washington. this is bbc news after a mid—air emergency on an alaska airlines flight — us officials demand

the grounding of one hundred and seventy one boeing 737 max 9 planes worldwide. israel's military says it has now �*completed the dismantling' of hamas�* military framework in northern gaza. and three years since supporters of donald trump stormed the us capitol, we'll reflect on what happened onjanuary 6th, a date that still divides america. us aviation officials have ordered the temporary grounding of more than 170 boeing 737 max 9 passenger planes — after a window and section of fuselage blew out in mid—air during a flight. the alaska airlines plane had 177 people on board friday when it was forced to make an emergency landing. no one was injured. the uk's civil aviation authority has said safety inspections need to be carried out before the planes

can enter uk airspace.